Table 14-2 Table 14-2 Shows the Payoff Matrix for Wal-Mart and Target

question 131

Multiple Choice

Table 14-2

Table 14-2 shows the payoff matrix for Wal-Mart and Target from every combination of pricing strategies for the popular PlayStation 4.At the start of the game each firm charges a low price and each earns a profit of $7,000.
-Refer to Table 14-2.Suppose Wal-Mart and Target both advertise that they will match the lowest price offered by any competitor.What is the purpose of such a strategy?

• A)to signal to each other not to charge below the current low price
• B)to signal to each other that they will not hesitate to initiate a price war
• C)to signal to each other that they intend to charge the high price
• D)to signal to each other to share the market equally

---

Definitions:

Interval Estimate

A type of estimate that provides a range of values within which a population parameter is expected to lie, often associated with a confidence level.

Efficient

Refers to achieving maximum productivity with minimum wasted effort or expense.

Unbiased

A term used in statistics to describe an estimate or model that is accurate and not skewed by any factors.

Point Estimate

A single value given as an estimate of a population parameter that is of interest, usually derived from sample data.